Modernize and Moderate

The GOP Should Stop Worrying About Income Taxes (For Now)

It's still not 1980 anymore, and if the GOP wishes to rebuild a formidable coalition on the level of Reagan's Revolution, we'll need more just a cosmetic makeover.

Here's one thought: with income tax rates now permanent, the GOP should shift its efforts to an across-the-board cut to the payroll tax.

I like you, Marco. Why don't you lead this one? (JEWEL SAMAD/AFP/GettyImages) ()

This quote from the Wall Street Journalillustrates why this is both a smart political move and a much needed kick in the pants for our shaky economic recovery:

The expiration of the payroll tax cuts that knocked 2% off consumers' take-home pay is having an impact, these companies say. It will ding a household with $65,000 in annual income $1,300 this year, and shift $110 billion overall out of consumers' hands, estimates Citigroup. ...

These companies say the changes could be long-lasting and are revamping operations to better cater to consumers pinched by higher taxes, stagnant wage growth and rising gasoline prices, which jumped nearly 50 cents a gallon in the past month alone.

Less take-home pay is causing 45.7% of consumers to curtail spending, according to a survey released on Thursday by the National Retail Federation, a trade group. A quarter of consumers are delaying big-ticket purchases, a third are reducing restaurant visits, and about a fifth of shoppers are spending less on groceries, it said.

In the below clip from Bloggingheads, Jamelle Bouie and I discuss the future of the GOP. I argue the GOP should center its strategy on the working class' major concerns in the 21st century: health care costs (and access!), the payroll tax, student debt, and wage stagnation.

The remarkable irony of Mitt Romney's "47%" remarks was the reason half of Americans no longer pay income taxes is that the Reagan Revolution successfully pushed lower income Americans off the income rolls. That was a feature, not a bug!

It's time for the next step: let's lower the payroll tax for everyone, but the first step is cutting the payroll tax for America's working class. The politics are great, the policy is even better.